This is an interesting twist in the digital only challenger bank space, Tandem, one of the leading online banks, announced it will acquire 100% of Harrods Bank. If the deal is approved by regulators, this will bring £80 million of capital into the combined business.
The acquisition also means that Tandem can accelerate its pursuit of becoming a full stack banking platform by providing current accounts. Tandem announced in March that a planned second round of investment from Fraser Financial Services did not close which caused a pause in their plans to offer savings accounts to customers. Harrods appears to be plan B in accomplishing this goal.
Harrods Bank operates from the Harrods store in Knightsbridge and currently caters to higher net worth individuals. Harrods Bank is a member of the Financial Services Compensation Scheme (FSCS) and has its own independent banking license. The FSCS can pay compensation to depositors if a bank is unable to meet its financial obligations. Harrods Bank is part Harrods Group which is currenlty owned by Qatar Holding LLC. The bank was originally launched in 1893.
As for Tandem, it has a far shorter history of operation.
Tandem was granted authorization to be regulated back in 2015 becoming only the second digital only platform to receive a license. Tandem aims to be the most helpful, not the most painful, bank for its customers. Tandem launched a crowdfunding campaign to raise £1 million on Seedrs. The offer topped its goal almost immediately and closed at £2.34 million (at a pre-money valuation of £65.7 million). Tandem had previously raised funding from a prominent group of VCs like Pierre Omidyar and Route66.
Tandem is not alone in its quest to redefine the banking experience and the general frustration most consumers hold towards their traditional banking relationship. Atom and Mongo are two of the most prominent names in the race to deliver the bank of the future. So who wins out? Consumers of course. Better service, lower cost using a totally mobile platform. There is a queue where you may sign up to be one of the first to gain access to teh Tandem platform.
Tandem has crafted a video along with the acquisition announcement. You may view it below.